Merkel offers budget target hope

Merkel offers budget target hope

German Chancellor Angela Merkel offered Greece a glimmer of hope on Friday for a possible review of the terms agreed by Athens and its creditors on state debt, including a high primary surplus target.

Addressing her summer press conference in Berlin, the German leader expressed confidence that the policies being pursued by Greece’s new Prime Minister Kyriakos Mitsotakis will strengthen growth, but added that the eurozone would have to see what he will do before making any decisions at the Eurogroup level. She also made it clear that there will be no “discounts” as a result of the change of government.

“Kyriakos Mitsotakis belongs to my political family,” Merkel said, referring to the conservative European People’s Party. “As such, I have know him well for a long time, so I am aware that regarding economic developments he has a different program to that of SYRIZA,” she added, in reference to Greece’s previous leftist administration.

“It is my political belief that he will bring the potential for more growth and liberate the forces of growth in Greece. Then we will have to see how things evolve – it is already very positive that Greece managed to issue a bond in the markets that was very well priced – and the rest of talks will have to be conducted with the Eurogroup and the Commission. But first we will need to see what he will do and how he will do it. The Eurogroup said there will be no immediate discount because there has been a change in government. Now we need to see the further developments,” the German chancellor said.

While the government is eager to have the primary surplus target reduced, opposition from creditors and its desire to keep their confidence, prompted Athens to agree to stick to the target of 3.5 percent of GDP for 2019 and 2020 at least.

Merkel also referred to her relationship with former premier Alexis Tsipras, noting that they worked very well together despite their political differences, because it was based on “undisputed” trust. “I consider it very important to act openly, with sincerity and honesty,” said Merkel.

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